Earlier this year it was reported that ISA contributions had reached an all time high, with Britons subscribing to over 16 million ISA accounts. With this in mind, the news that the Government proposes to continue ISA savings schemes is most welcome.As the UK's indebtedness becomes an increasing problem, the Government needs to continue to promote the benefits of saving, the importance of long term planning and saving for retirement if they stand any hope of converting us from a nation of borrowers to a nation of savers.
The key proposals include an open-ended commitment to provide ISAs, with a maximum investment of at least £7,000 per annum. Additionally, they are looking to simplify the ISA account system, abolishing the mini/maxi distinction and giving the option to allow child trust funds to convert to an ISA on maturity.
While it is welcome news that ISAs are here to stay, there is still perhaps more the Government needs to do, or could do to create the savings culture it desires. Moneyfacts along with many other financial commentators would like to see the maximum ISA limit increased, particularly the cash component, which will be more widely used by the main audience the Government is aiming for. The limit will also become outdated over time. With the real value falling every year, perhaps the limit should be index linked.
Let's hope the simplification process will not only bring transparency to the market but also remove confusion and the misconception that ISAs are complicated and perhaps only for the wealthy.
A mini cash ISA should be the first port of call for you if you're looking to start saving.
After all it isn't every day that the Government gives you something for nothing.
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